... the VC has invested $5 million and has a PCP stake then on conversion to common equity he gets $6 million (i.e. 50% of $12 million), but ... rights. In contrast, most agreements provide for automatic conversion of the convertible stake into common equity in case of an ...
Story - antoq - 11/09/2010 - 07:15 - 0 comments - 0 attachments
Personal resource systems define the quality of daily living, shaping personal well-being, societal satisfaction and overall quality of life. This study explores the construct of such systems through the emerging concept of Personal Resource Systems Management (PRSM) and models that concept for future research, consideration and debate. It is a qualitative exercise in grounded theory, a demonstration of integrative, interdisciplinary scholarship and a contribution to interactive practice in resource management, a subject matter specialty of Family and Consumer Sciences (FCS). As such the proposed PRSM model advances the stated goal of FCS practice to "promote optimal well-being of families, individuals and communities." Specifically, a PRSM model within the context of FCS should.
• describe person-environment interaction
• as well as aggregates thereof (family and community) and
• identify diverse daily impacts on the quality of living, personal well-being, societal satisfaction and overall quality of life
• by modeling a consistent system of multiple options, each with a clear solution
This paper proposes a simple investment model that permits a test of the relative importance of Mexico's terms of trade decline, the reversal in net capital inflows, and the debt overhang, in explaining Mexico's investment decline in the early 1980's. The paper uses previously unexploited sectoral investment data between 1981 and 1985 to estimate the quantitative importance of these explanations. The data indicate that the main microeconomic mechanism driving the investment decline was the rise in the relative price of investment goods, and further that the deterioration in Mexico's international terms of trade explains most of the increase in this relative price. Our preferred estimate is that about two-thirds of the investment decline was attributable to the terms of trade decline, while the termination of capital inflows explains the remaining third. The paper finds little evidence in favor of other debt crisis effects such as the debt-overhang effect or several other more subtle effects that have been proposed in the literature.
This paper proposes a simple investment model that permits a test of the relative importance of Mexico's terms of trade decline, the reversal in net capital inflows, and the debt overhang, in explaining Mexico's investment decline in the early 1980's. The paper uses previously unexploited sectoral investment data between 1981 and 1985 to estimate the quantitative importance of these explanations. The data indicate that the main microeconomic mechanism driving the investment decline was the rise in the relative price of investment goods, and further that the deterioration in Mexico's international terms of trade explains most of the increase in this relative price. Our preferred estimate is that about two-thirds of the investment decline was attributable to the terms of trade decline, while the termination of capital inflows explains the remaining third. The paper finds little evidence in favor of other debt crisis effects such as the debt-overhang effect or several other more subtle effects that have been proposed in the literature.
A large body of evidence suggests that credit market frictions play an important role for firm behavior. Empirically, panel data studies find that small firms with more difficult access to credit pay fewer dividends, take on more debt, and have investment rates that are more sensitive to cash flows even after controlling for future profitability. Theoretically, numerous papers show how optimizing models of the firm with incomplete contract enforcement and asymmetric information in the lending process can rationalize the observed correlation of firm size and age with mean growth (negative) and survival rates (positive).
While the relevance of credit market frictions is well established on the microeconomic level, their macroeconomic consequences for business cycle fluctuations are less obvious. Models of financial intermediation and agency costs by Bernanke and Gertler (1989) or Kiyotaki and Moore (1997) imply that the firm’s ability to finance investment varies inversely with the value of its collateral and thus with the business cycle. This financial accelerator mechanism has the potential to generate amplified and persistent output effects in response to small shocks. Yet, simulations in a dynamic stochastic general equilibrium (DSGE) context by Kocherlakota (2000), Chari, Kehoe and McGrattan (2002), or Petrosky-Nadeau (2005) suggest that for plausible calibrations, credit market frictions of this type alone fail to generate quantitatively important business cycle fluctuations.
